The rapid growth of the mobile sales of Poly-Mei Excellent products

Absrtact: Beijing time April 12 morning news, Poly beauty products to the United States Securities and Exchange Commission (SEC) in Friday to submit a prospectus, plans to raise 400 million of billions of dollars through the IPO transaction, to the New York Stock Exchange/NASDAQ listing, the stock trading code is Jmei. Following

Beijing time, April 12 morning news, Poly beauty products to the US Securities and Exchange Commission (SEC) in Friday to submit a prospectus, plans to raise up to 400 million U.S. dollars through the IPO transaction, the New York Stock Exchange/NASDAQ listing, the stock trading code is "Jmei."

The following is a summary of the prospectus:

Our business

According to Forst & Sullivan's report, we are China's number one online retailer of beauty products in total merchandise trading (GMV), with a market share of 22.1% in 2013. Since the launch of the jumei.com website in March 2010, we have achieved rapid growth. With just about 13 million dollars in private equity, we have achieved our current size and profitability. In 2013, we achieved a net revenue of USD 483 million and a net profit of USD 25 million, with an active user of about 10.5 million.

We believe that our Internet platform is trusted by users to help them find and buy branded beauty products, fashion apparel, and other lifestyle items. Using our in-depth understanding of consumer needs and preferences, as well as our strong business capabilities, we have introduced a variety of effective sales methods to stimulate the purchase of goods on the platform. Our current forms of sales include limited-hours selling, online shopping malls and flash purchases.

Limited-time special selling is a new form of online sales, that is, within a limited period of attractive prices to recommend the selection of brand beauty products. Through product recommendations and in-depth product introductions, our limited-timed mode has attracted the attention of online consumers and helped us build a strong user base. In the long run, we also sell a wide range of branded beauty products through online shopping malls to enhance user stickiness. To further enhance and complement the user experience and provide more options, we also offer a limited-limit discount on fashion apparel and other lifestyle items through the flash-purchase model.

We have built a huge, highly participatory, highly loyal user base that offers a wide selection of products that are essential to our rapid growth. In 2011, 2012 and 2013, our active users were 1.3 million, 4.8 million and 10.5 million, respectively. 2013, repeat purchase orders accounted for 88.9% of the total number of orders. Our suppliers and third party businesses include a number of brand owners, brand distributors, agents, and certain unique product suppliers. In 2013, our suppliers and third party merchants were about 1700.

We believe that consumers will increasingly be shopping through the mobile internet. Therefore, we have invested a lot of resources to build mobile platforms and focus on providing a better mobile shopping experience. As a result, sales from mobile platforms have increased dramatically since the launch in May 2012. Mobile platform sales accounted for about 49% of GMV in the first quarter of 2014.

Our management team has a visionary approach to discovering and meeting the changing consumer needs and market opportunities in the beauty products market. Under the leadership of management, we have attracted a large number of loyal users with our innovative and efficient marketing campaigns, and the reputation of selected goods and excellent user experience. We are further enhancing the attractiveness of our products by reaching exclusive sales agreements with Chinese beauty products suppliers or exclusive distribution of specific products. We have taken effective measures to control costs and operating costs, which have helped us achieve operational profitability and continue to increase our profits.

In 2011, 2012 and 2013, our net revenue was 21.8 million US dollars, 233.2 million dollars and 483 million dollars respectively. In 2012 and 2013, our net profit was $8.1 million and $25 million, compared with a net loss of $4 million in 2011. In 2012 and 2013, our net cash from operating activities was 27.4 million US dollars and 84.8 million dollars respectively. In 2011, the net cash spent on operating activities was 2 million dollars.

Our industry

The development of China's beauty makeup products industry. According to Frost & Sullivan, China's beauty products industry has grown steadily over the past few years, with retail sales rising from 136.2 billion yuan (USD 22.5 billion) in 2010 to 220.9 billion yuan (36.5 billion US dollars) in 2013, Annual compound growth rate was 17.5%. By 2018, the sale is expected to reach 431.8 billion yuan (71.3 billion U.S. dollars), so the annual compound growth rate for 2013 to 2018 will be 14.3%. According to the report, in 2013, Watson, GMV and Silk orchid are the top three retailers of American cosmetics products in China.

China's online retail market. China has the world's largest internet community, with about 617.6 million internet users as of December 31, 2013. According to Frost & Sullivan, this equates to about 2.5 times times the number of Internet users in the United States. The proportion of online retail sales to retail sales rose from 3.3% in 2010 to 8.1% in 2013, and is expected to grow further to 13% by 2018. The growth of online retail sales relative to offline sales reflects the fragmentation of the Chinese retail market, the acceptance of online retailing by users, and the improvement of online retailer logistics networks and payment systems.

In recent years, online retail sales of American makeup products are growing fast. According to Frost & Sullivan's report, in 2013, the sales of Business-to-consumer cosmetics reached 22.6 billion yuan (3.7 billion U.S. dollars), higher than 2010 's 17 billion yuan (3 billion U.S. dollars), the annual composite growth rate of 136.5%. By 2018, the sales are expected to reach 94.6 billion yuan (USD 15.6 billion), so the compound growth rate from 2013-2018 will be 33.2%. The proportion of online consumer products sales to the total retail sales of Chinese beauty products has risen from 1.3% in 2010 to 10.2% in 2013, and is expected to grow to 21.9% by 2018.

The rise of China mobile business. According to Frost & Sullivan, the number of smartphone users in China reached 475.1 million in 2013. The number of active mobile business users was 144.4 million, up 160.5% from 2012, and projected to grow to 762.6 million by 2018, thus increasing the annual composite growth rate from 2013 to 2018 at 39.5%. In 2013, retail sales of mobile commerce amounted to 303.7 billion yuan (USD 502 billion), which grew 271.6% from 2012 to 2.2268 trillion yuan (367.8 billion USD) in 2018, As a result, the compound growth rate from 2013 to 2018 was 49%.

The rise of special selling during limited hours. According to Frost & Sullivan's report, special selling is a revolutionary way of selling beauty products compared to traditional offline channels. Limited-timed special selling is an innovative form of sales, the first to select a finite product, and then recommend sales. On a limited-time selling platform, each product is sold only within a finite amount of hours, and this platform will increase user traffic through specialized branding and merchandise.

The recommended feature for limited-time sales can drive frequent user access, which helps users get information about the latest trends in the market. As a result, the time-limited special-sale form assists in the establishment of a high degree of loyalty, a high degree of participation in the user community, and facilitates the duplication of purchases. In addition, in order to promote the latest beauty products to Chinese consumers, through online channels to enhance the brand image, the limited-availability of special selling form is particularly effective.

Unlike Flash shopping, limited-timed selling is a more efficient and effective channel to recommend new products by directing consumers to purchase decisions. The operators of the limited-time selling platform are able to showcase and sell selected High-quality products, recommend their purchases through detailed descriptions and extensive user reviews, without limiting the number of items they can buy or offer extremely high discounts.

Our advantage

We believe that the following key competitive advantages have contributed to our development and success so far:

-China's first online beauty products retailer.

-Have outstanding marketing ability, far-sighted management.

-Powerful mobile platform.

-Online retail brand of trusted beauty products.

-high degree of participation, high loyalty of the user base.

Our strategy

Our goal is to become a female consumer of online shopping destinations, as well as fashion and beauty industry trend-driven. We plan to achieve our goals through the following development strategies.

-Expand the product line.

-Strengthen mobile platforms.

-Improve user experience and increase user loyalty.

-Improve brand awareness.

-Expand our operational capabilities.

-Seek strategic partnerships, investment and acquisition opportunities.

Our challenge

Our ability to achieve our goals and to implement our strategies is challenged and uncertain, including those related to:

-Maintain and enhance the recognition and reputation of the poly-American brand.

-effective participation in competition.

-The ability to assess our prospects in view of the limited operational history of the company.

-Effectively manage our development and implement our strategy.

-Verify that the goods sold through our internet platform are authentic and licensed.

-Provide a better user experience to provide goods at attractive prices to meet the needs and preferences of consumers.

-Manage and expand our relationships with suppliers and third party merchants to purchase goods on preferential terms.

-Expand our logistics network, develop and maintain relationships with third party express service providers.

-Attract, train and retain high-quality staff.

In addition, we are faced with the following risks and uncertainties as a result of the company's structure and its presence in China:

-Risks associated with our control over Reemake media. This control is based on protocol arrangements, not equity ownership. The use of Reemake media assets is important to our business operations, including domain names and trademarks owned by Reemake Media.

– The risk of conflict arising from the trust obligations established by the People's Republic of China and Caimas, Is.. Because of different jurisdictions, there is currently no framework to resolve such fiduciary obligation conflicts.

-Uncertainties regarding regulatory requirements and policy formulation and scope of application of the PRC, including regulatory requirements and policies related to the electrical and commercial sector.

-China's exchange rate controls mean that our use of the proceeds of the IPO would be risky to provide capital inputs or loans to subsidiaries in China.

Company history and structure

In August 2009, our founder, Chairman and CEO Chen Au, as well as two co-founders, set up Reemake Media in Beijing. In March 2010, we launched the online beauty retail business through Reemake media through the United States brand. Reemake Media acquired a 100% stake in Beijing Shengjinteng Network Science and Technology Co., Ltd in January 2011.

August 2010, under the Caimas, Is. Law, we set up the United States International Holdings Limited, as our offshore holding company. In September 2010, we established Hong Kong's wholly-owned subsidiary, Poly-Hong Kong Limited, as an intermediary holding company. March 2011, the United States and Hong Kong Limited in the People's Republic of China set up a wholly-owned subsidiary of the United States Excellent products (Beijing) Technology Services Co. The company was subsequently renamed Beijing Silvia Technology Service Co. Ltd, the Beijing Poly-Mei.

As a result of the PRC's legal restrictions on foreign ownership and investment in telecom value-added service providers, we operate through the Reemake Media protocol control. Reemake Media is our unified variable interest entity (VIE) in China. In April 2011, through a series of agreements with Reemake media and its shareholders, we gained control of Reemake media through the Beijing Poly United States. Reemake media holds our Internet content provider (ICP) license and operates our website as an Internet Information provider. As a result of this arrangement, Reemake media becomes a variable interest entity, and we are the main beneficiaries. In our consolidated financial statements, we have recorded the financial results of Reemake Media and its subsidiaries under the United States General accounting standards.

Poly-Mei Hong Kong Limited in June 2012 set up the Shanghai Paddy Commerce and Trade Co., Ltd., established in July 2012, Chengdu Poly-Mei Excellent Products Technology Co., Ltd, established in March 2013 Tianjin Cycil Information Technology Co., Ltd. and Tianjin Darren Trading Co., Ltd. The latter company was renamed Tianjin Qianmei International Trading Co., Ltd. in March 2014. December 2013, Poly-Mei Hong Kong Limited established a wholly owned subsidiary Tianjin Venus Technology Co., Ltd.